The Epistemology of Living Organizations ― Theoretical Foundations and Practical Applications

1. Attribution CC BY The Epistemology of Living Organizations―Theoretical Foundations and Practical Applications An attractor William P. Hall President Kororoit Institute Proponents and Supporters Assoc., Inc. - http://kororoit.org Associate EA Principals – http://eaprincipals.com william-hall@bigpond.comhttp://www.orgs-evolution-knowledge.net Presentation for Melbourne Emergence Meetup, 12 September 2013 A unique area inthe state space of the Mandlebrot set definition Access my research papers from Google Citations

2. My Background • Early life: physics / natural history / cytogenetics / evolutionary biology (PhD Harvard, 1973) • Defining life as a physical phenomenon • Understanding how it evolves • 1981-1989: Computer literacy journalism, technical writing, commercial software development, banking • 1990-2007: Documentation and knowledge management systems analyst/designer for Tenix Defence/$ 7 BN ANZAC Ship Project • Tenix grew to be Australia’s largest defence engineering prime contractor and then failed. • How did Tenix succeed and why did it fail? • 2001-now: Researcher trying to understand what organizational knowledge is and why organizations have such major problems managing and applying it

3. Understanding the relationships betweenknowledge and life • What is life - autopoiesis • Karl Popper’s evolutionary epistemology • Human biology • Adaptation • Genetic vs cultural heredity (knowledge transfer) • Origins of culture and social organization • Answering questions from my corporate career • Organizations as complex adaptive systems • James Martin’s Cybercorp (1996) • < 2001: trying to combine my understanding of biology and corporate experience in a hypertext fugue on the theory of knowledge • Theoretical foundations of organizational knowledge • This talk only scratches surface - see my publications

4. Autopoietic (i.e., living) systems Knowledge and life are inseparable. With a proper definition of life, knowledge-based organizations are seen to be living • Maturana, H.R., Varela, F.J. 1980. Autopoiesis and Cognition – the Realization of the Living. Kluwer. • Nelson, R.R., Winter, S.G. 1982. An Evolutionary Theory of Economic Change, Harvard Uinv. Press. • Kauffman, S.A. 1993. The Origins of Order – Self-organization and Selection in Evolution. Oxford Univ. Press • Hall, W.P. 2005. Biological nature of knowledge in the learning organization. The Learning Organization  12(2):169-188.

5. Past is fixed Present is determined in the instant of becoming Future is undetermined Solid line – what happened Stuart Kauffman – adjacent possible t1 Dashed lines represent all of the possible future states that can be reached in the next instant from the present instant t2 One state was realized at t1 , Dotted lines lead to states that could have happened at t1butdidn’t/can’t happen. Dashed lines represent states that can still be reached from the state at t2 Future possibilities are continually and progres-sively constrained by realization of the present Ellis (2006) Evolving block universe (Newtonian)Ellis & Rothman (2010) Crystallizing block universe (quantum mechanical)

6. What makes a system living? • Autopoiesis • Self-regulating, self-sustaining, self-(re)producing dynamic entity • Fundamentally cyclical, continuation depends on the causal structure of the state in the previous instant to produce autopoiesis in the next instant (ref Popper; Maturana & Varela) • Selective survival builds knowledge into the system one problem solution at a time Self producing entity in Conway’s Game of Lifecellular automaton Autopoietic system

7. Six necessary and sufficient criteria for recognizing an autopoietic system • Bounded • System components identifiably demarcated from environment • E.g., organizational badges, logos, reception desks, gates, etc. • Complex • separate and functionally different subsystems exist within boundary) • Mechanistic • System dynamics driven by self-sustainably regulated economic cash flows or dissipative “metabolic” processes • Self-defining • System demarcation intrinsically produced • E.g., employment policies, procedures, etc. • Self-producing • System intrinsically produces own components • E.g., recruitment & training programs • Autonomous • self-produced components are necessary and sufficient to produce the system.

8. Spontaneous co-emergence of autopoiesis and knowledge • (Stuart Kauffman) The dynamic vectors of the present instant result from causal events in past instants as reflected in the adjacent possibles of the immediately prior instant • Historical connections (heritage) determine the vectors in state space of the present instant. • Attractor basins: convergent paths may become coherently autopoietic, such that the ensemble structure of a convergent state in one instant generates an ensemble structure that remains convergent in the next instant. • Chaos: divergent paths lead to incoherent structures that dis-integrate and lose the historical thread of successful autopoiesis • Ensembles that remain convergent through the selective elimination of divergent outcomes retain structural knowledge that solved a problem of survival to retain convergent structure Kauffman, S. 1993. The Origins of Order. Oxford Univ Press, London. Hall, W.P., Else, S., Martin, C., Philp, W. 2011. Time-based frameworks for valuing knowledge: maintaining strategic knowledge. Kororoit Institute Working Papers No. 1: 1-28. Hall, W.P. 2011. Physical basis for the emergence of autopoiesis, cognition and knowledge. Kororoit Institute Working Papers No. 2: 1-63

9. Karl Popper’s Evolutionary Epistemology In his later work, Popper applied evolutionary biology to his theory of knowledge • Popper, K.R. 1972. Objective Knowledge – an Evolutionary Approach. Oxford University Press / Routledge. • Popper, K.R. 1994. Knowledge and the Body-Mind Problem – in Defence of Interaction. Routledge. • Hall, W.P. 2003. Managing maintenance knowledge in the context of large engineering projects - Theory and case study. Journal of Information and Knowledge Management, Vol. 2, No. 2 - http://tinyurl.com/3yqh8j

10. Popper's first great idea: “three worlds” ontology “codified knowledge” “living knowledge” Cybernetic self-regulation Cognition Consciousness Tacit knowledge Genetic heredity Recorded thought Computer memory Logical artifacts Explicit knowledge Develop/Recall Reproduce/Produce World 2 Organismic/personal/ situational/subjective/tacit knowledge in world 2 emerges from world 1 Test Observe World 3 The world of “objective” knowledge Regulate/Control Describe/Predict Drive/Enable Inferred logic Energy flow Thermodynamics Physics Chemistry Biochemistry The real world World 1 – External Reality

11. Karl Popper's second great idea from Objective Knowledge:Knowledge = solutions to problems Pn a real-world problem faced by a living entity TS a tentative solution/theory.Tentative solutions are varied through serial/parallel iteration EE a test or process of error elimination Pn+1 changed problem as faced by an entity incorporating a surviving solution The whole process is iterated Karl Popper, Objective Knowledge – An Evolutionary Approach(1972), pp. 241-244 • All knowledge claims are constructed, cannot be proven to be true • TSs may be embodied as “structure” in the “knowing” entity, or • TSs may be expressed in words as hypotheses, subject to objective criticism; or as genetic codes in DNA, subject to natural selection • Objective expression and criticism lets our theories die in our stead • Through cyclic iteration, sources of errors are found and eliminated • Solutions/theories become more reliable as they survive repetitive testing • Surviving TSs are the source of all knowledge!

12. Biological basis of human individual and social knowledge Basically we are bipedal apes who became top predators on the African savannah Hall, W.P. 2013. Evolutionary origins of Homo sapiens. Extract from Application Holy Wars or a New Reformation: A fugue on the theory of knowledge [in preparation] - http://tinyurl.com/kqrcxsf

13. Our family tree • CLCA was a forest ape using simple natural and biodegradable tools to increase dietary range probably a lot like today’s chimps and bonobos • Changing climates broke up forest into grassy woodlands. Ardipithecus adapted by developing bipedal locomotion and use of tools for self-protection and to harvest wider dietary range. • Australopithecus became a successful savannah dweller • Homo became top carnivore in Africa and Eurasia White et al’s (2009) depiction of the adaptive plateaus achieved by the different species grade shifts in the Pliocene radiation of hominins as our ancestors became more adapted to more open and arid environments. CLCA = chimpanzee-human last common ancestor.

14. We are apes • Our close primate cousins, orangutans, gorillas, chimpanzees and bonobos live in organized social groups that make and use tools • Orangutans live in small single mum families but are effective tool users and teachers • Another video shows mother taking boat to raid a fish trap for a meal • Chimpanzees work in larger social groups with a lot of interaction Attenborough: Amazing DIY Orangutans - BBC Earth - http://tinyurl.com/avl8yby Charlotte Uhlenbroek Chimpanzees' sophisticated use of tools - BBC wildlife – http://tinyurl.com/lj8ejt2

15. Pleiocene climate change forced some apes onto a savanna – a tough neighbourhood to survive in! • Grave risk of predation by big cats & other carnivores on savanna • Gangs of chimps can cooperate to deter cats • Anthropoid apes aren’t the only primate tool users • See Capuchin nut-cracking industry - http://tinyurl.com/mky2b3l From Tattersall (2010) Masters of the Planet, p. 49 see Kortlandt 1980. How might early hominids have defended themselves against large predators and food competitors? Journal of Human Evolution 9, 79-112 – http://tinyurl.com/l5z5vu2

16. Cultural knowledge transfer and adaptation to the savanna opened new worlds • Guthrie (in Roebroeks2007) speculated that a tiny technological improvement was all that was needed for a more effective defence than waving big sticks • Any cat running into a thorn branch will have its eyes torn to shreds. Cats “know” this! • Easy step from thorn branch to spear for hunting

17. Genetic vs cultural heredity (mechanisms for knowledge transfer) • Shared heritage defines the species/group • Adaptation = change through time • Natural selection eliminates entities with maladaptive genes/knowledge • Genetic heritage from one gen. to next is slow to change) • Cultural heritage can lead to more rapid change • More plastic but may not durable unless reinforced • Can be shared laterally • Capacity for language is very recent • Linguistically expressed language can be criticized & peer reviewed • Tacit vs explicit sharing & transfer • Self-selection / criticism to eliminate errors • Memory of and learning from history • Speech, writing

18. Increasing tool complexity in archaeological record • Development of increasingly complex stone tools (after Stout 2011), correlates with increasing brain capacity (and more social intelligence?) • Exponential growth in technology continues up to today with development of cognitive tools: speech, writing, printing, computers and the internet. • Today computing technology is growing hyper-exponentially • See extract from my draft book

19. Foundations of organizational knowledge Understanding organizational knowledge and how to manage it flows naturally from the biological point of view • Hall, W.P., Dalmaris, P., Nousala, S. 2005. A biological theory of knowledge and applications to real world organizations. Knowledge Management in Asia Pacific, Wellington, N.Z. 28-29 November 2005 • Vines, R., Hall, W.P. 2011. Exploring the foundations of organizational knowledge. Kororoit Institute Working Papers No. 3: 1-39

20. Scalability and the complex organizational hierarchy • Knowledge-based autopoietic systems may emerge at several different hierarchical levels of organizational structure • Nation • State • Council • Community group • Person • Body cell • For effective action, flows of knowledge, decision and action must pass through several hierarchical levels Hall, W.P. 2006 Emergence and growth of knowledge and diversity in hierarchically complex living systems. Workshop "Selection, Self-Organization and Diversity CSIRO Centre for Complex Systems Science and ARC Complex Open Systems Network, Katoomba, NSW, Australia 17-18 May 2006.

21. Personal (i.e., human) knowledge • Sense making • W2 process constructing tacit understanding in context • We only know what we know when we need to know it (W2) (W2) (W3) (W2) (W2/W3) Nickols, F. 2000. The knowledge in knowledge management (KM). in J.W. Cortada and J.A. Woods, eds. The Knowledge Management Yearbook 2001-2002. Butterworth-Heinemann

22. Creating and building knowledge is cyclical • Knowledge is solutions to problems of living • Iterated cycles of creation and destruction (Boyd, Osinga) • Creation = assembly of sense data and information to suggest claims about the world • Destruction = testing and criticizing claims against the world to eliminate those claims that don’t work • Popper: solutions are those claims which prove to work (at least most of the time) • Knowledge is mentally constructed • Cannot logically prove that any claimed solution is actually true • All claims must be considered to be tentative (i.e., potentially fallible) • Follow tested claims until they are replaced by something that works better • Knowledge building cycles are endlessly iterated and may exist at several hierarchical levels of organization

23. O DNA GENETIC HERITAGE CULTURE PARADIGMS PROCESSES INPUT ANALYSIS SYNTHESIS MEMORY OF HISTORY Cyclic construction of tactical/strategic knowledge OBSERVE (Results of Test) ORIENT DECIDE (Hypothesis) ACT (Test) GUIDANCE AND CONTROL PARADIGM OBSERVATION PARADIGM EXTERNAL INFORMATION D A O CHANGING CIRCUMSTANCES UNFOLDING ENVIRONMENTAL RESULTS OF ACTIONS UNFOLDING INTERACTION WITH EXTERNAL ENVIRONMENT John Boyd's OODA Loop process Achieving strategic power depends critically on learning more, better and faster, and reducing decision cycle times compared to competitors. See http://en.wikipedia.org/wiki/OODA_loop.

24. Personal vs organizational knowledge • Important difference • individual knowledge (in any form) is known only by a person • organizational knowledgeis available and physically or socially accessible to those who may apply it for organizational needs • Even where explicit knowledge exists, individual knowledge may be required to access it within a useful response time. • People know: • what knowledge the organization needs, • who may know the answer, • where in the organization explicit knowledge may be found, • why the knowledge is important or why it was created, • when the knowledge might be needed, and • how to apply the knowledge • This human knowledge is critical to the organization • Snowden, D. 2002. Complex acts of knowing: paradox and descriptive self-awareness. J. Knowledge Management 6:100-111 • Personal knowledge is volunteered; it cannot be conscripted. • People always know more than can be told, and will tell more than can be written down. • People only know what they know when they need to know it.

25. CULTURE & GENETIC HERITAGE PARADIGMS PEOPLE PEOPLE PEOPLE ANALYSIS SYNTHESIS ORIENT (PROCESS) OBSERVE SENSE DECIDE, ACT INFRASTRUCTURE LINKS ANNOTA - DOCS RECORDS DATA CONTENT RELATIONS TIONS “ CORPORATE MEMORY ” OODA system of systems in the knowledge-based organization Boyd 1996 see Osinga, F.P.B. (2005) Science, Strategy and War: the strategic theory of John Boyd. Eburon Academic Publishers, Delft, Netherlands [also Routledge, Taylor and Francis Group (2007)] - http://tinyurl.com/26eqduv

26. KNOWLEDGE KNOWLEDGE OBSERVE, TEST & MAKE SENSE OBSERVE, TEST & MAKE SENSE BUILDING BUILDING PROCESSES PROCESSES ANTICIPATE & INFLUENCE ANTICIPATE & INFLUENCE WORLD 2 WORLD 2 ? ? DRIVE & ENABLE DRIVE & ENABLE PERSONAL PERSONAL SEMIPERMEABLE SEMIPERMEABLE KNOWLEDGE KNOWLEDGE BOUNDARY BOUNDARY ? ? WORLD 1 WORLD 1 KNOWING KNOWING ORGANIZATION ORGANIZATION (including organizational tacit knowledge) (including organizational tacit knowledge) ENVIRONMENTAL ENVIRONMENTAL CONTEXTS CONTEXTS WORLD 3 WORLD 3 KNOWLEDGE FLOWS KNOWLEDGE FLOWS & EXCHANGES & EXCHANGES IFK IFK Code: Code: EK EK – – Explicit Knowledge Explicit Knowledge ( ( W2 W2 ) ) CK CK – – Common Knowledge Common Knowledge } } FK FK FK FK – – Formal Knowledge Formal Knowledge Semantics of explicit Semantics of explicit IFK IFK – – Integrated Formal Integrated Formal knowledge are only knowledge are only CK CK Knowledge Knowledge available via World 2 available via World 2 processes processes For the purposes of this diagram For the purposes of this diagram EK EK CK and FK are expressions CK and FK are expressions of explicit knowledge ( of explicit knowledge ( EK EK ) ) Building and processing knowledge in the organization / community Vines, R., Hall, W.P. 2011. Exploring the foundations of organizational knowledge.

27. Hierarchy of knowledge building cycles • 3 stages in building reliable knowledge • Personal/individual • Group/team • Peer review/formal publication world knowledge-base application of existing knowledge Knowledge construction cycle Vines et al. 2011Hall, Nousala 2010Nousala et al. 2010Hall et al. 2010

28. Putting theory into practice Understanding how to manage organizational knowledge flows naturally from the biological point of view • Hall, W.P., Dalmaris, P., Nousala, S. 2005. A biological theory of knowledge and applications to real world organizations. Knowledge Management in Asia Pacific, Wellington, N.Z. 28-29 November 2005 • Vines, R., Hall, W.P. 2011. Exploring the foundations of organizational knowledge. Kororoit Institute Working Papers No. 3: 1-39

29. Enterprises exist in contexts that must be addressed as imperatives if they are to survive • Enterprises are living entities • Require cash flow & replacement of staff departures • If they fail to satisfy their imperatives they disintegrate • No enterprise or subsidiary component should be considered in isolation from its existential contexts • What are its imperatives for continued existence? • to maintain survival and wellbeing • to maintain resource inputs necessary to survival • to produce and distribute goods necessary to survival • to survive environmental changes • to minimize risk • to maintain future wellbeing • Organizational systems satisfying imperatives must track continually changing contexts with observations, decisions and actions

30. Fixed price contract (only adjusted for currency changes) Procurement - 80% subcontracted 17 years in production In service for 27 years Warranty 12 months for each ship 2 year latent defects period 10 ship years of Operational Availability Assessment Period The 17 year $7 Bn ANZAC Ship Project • Design & systems integration • Fabrication and assembly • 10 ships (8 RAN + 2 RNZN) • 3 training facilities (2 RAN + 1 RNZN) • Support engineering (without this the ships are scrap metal) • Full ship fitouts & supply chain spares • Crew training • Operations manuals • 2000+ maintenance procedures per ship

31. What does an imperative look like? • 10 ships must be accepted  $A 7 Bn project value • Payment depends on acceptance! • Non acceptance = non-payment, project delay, liquidated damages + reputational damage

32. Imperatives for delivering knowledge or using it in an engineering/production environment • Customer end user's knowledge imperatives • Correct • Correct information • Consistent across the fleet / product range • Applicable/Effective • Applicable to the configuration of the individual product • Effective for the point in time re engineering changes, etc. • Available • To who needs it, when and where it is needed • Useable • Readily understandable by those needing it • Readily managed & processed in computer systems • Supplier's knowledge production and usage goals • Fast • High quality • Low cost

33. Project A Project A Design Study Bid Documents RFT and Bid Review, edit, signoff Review, edit, signoff RFQs Project A Procedures, Design Docs Bids Negotiations Project B Project B Project B Design Study Design Study Design Study Review, agree, amend Project A Project A Subcontracts Support Documents Review, edit, signoff Review, edit, signoff Review, edit, signoff Operational experience Review, edit, signoff Objective knowledge development lifecycle for a large project Project A Prime Contract Negotiate Review, agree, amend Negotiate 20 - 50 year lifecycle •

34. The full support engineering knowledge management environment Tenix Navy

35. Tenix ANZAC’s measured improvements from KM solution • Tenix’s Ship 05 delivery challenge • For safe maintenance “documents” must be understood by human maintainers and computerized maintenance management system • Document & engineering change management issues • Client threat to not accept 05 if still dissatisfied • Structured authoring solution resolved the issue • Condensed 8,000procedures for 4 ships to class-set of less than 2,000 ‘structured records’ for 10 ships • Routines delivered for Ship 5 CUT 80% • Subsequent content deliveries CUT 95% • Keyboard time for one change CUT more than 50% • Change cycle time CUT from 1 year to days • $ 7 Billion 17+ year long project completed successfully • Each ship delivered on time - every time • For the stringently fixed price – no cost overruns! • For a healthy company profit • The customers are still happy with the ships • The company failed on its next largish project because it did not transfer its learning from the old project to the new one